One of the bidders lining up an offer for 315 branches being sold by Royal Bank of Scotland (RBS) is to list on the stock exchange this week as part of a wider £1.5 billion funding plan.

W&G Investments – a group of more than 20 fund managers led by former Tesco finance director Andy Higginson - is hoping to raise an initial £15 million to cover bid costs, the Sunday Times reported.

If the listing manages to raise its target fund, W&G Investments said it will use the listed company to inject a further £1 billion in cash in its bid for the branches.

RBS is being forced by the EU to sell the branches to meet state aid rules linked to its £45.5 billion taxpayer-funded bailout.

A £1.6 billion deal to sell the branches to Spanish banking giant Santander collapsed last October.

W&G, named after the Williams & Glyn's brand being sold by RBS alongside the branches, will list on the stock market on Wednesday but then suspend its shares until the outcome of the auction process is known.

As well as plans for a flotation, W&S is also considering selling a minority stake to private equity and institutional investors in an effort to kick-start the process.

Rival bids for the branches are expected from Corsair Capital, who are lining up a bid alongside US private equity firm Centerbridge Capital, as well as a joint bid from AnaCap and Blackstone.

Meanwhile, business secretary Vince Cable stated over the weekend it could be another five years before the government's 81 per cent stake in RBS is sold back to the private sector.

Cable believes there is little prospect of a sale before the next general election in 2015 and it was likely the government will hold a stake in RBS for the majority of the next parliament as well.

His remarks, in an interview published in the Sunday Telegraph, are at odds with RBS chairman Sir Philip Hampton, who believes the sale process should begin as early as next year.

Cable said: “I don't think it would be sensible for the Government to set a rigid timetable, but given where we start from I think it is pretty unrealistic to think of RBS going back into private ownership this Parliament or probably within five years.”

Investment bank Rothschild is currently conducting a review of RBS to determine whether it should be split into a "good" and "bad" bank.

Last week it was reported the Treasury was considering a further £1.5 billion cash injection into RBS if it is to be broken up.

Cable added: “I think there is a very strong argument for saying that the bank got too big and indeed that was the source of its undoing.

"But we are having to balance the benefits of breaking up the bank (and) the potential benefits for competition (with) the significant costs, particularly in terms of disrupting IT systems.

"My colleagues in the Treasury are doing very detailed work on that cost-benefit calculation, because there is no simple yes or no answer.”

The Rothchild review was ordered in response to recommendations outlined in the cross-party Parliamentary Commission on Banking Standards, which published its findings in June.

Its recommendations included an urgent review of RBS to look at alternatives to selling off the taxpayers stake.

The Commission suggested a so-called 'good bank' would be easier to re-privatise, leaving the bulk of RBS's more toxic assets in a government-backed 'bad bank'.

The proposals for the 'bad' bank would see the government hold on to non-performing assets, avoiding the need for a fire sale of those assets to allow time for the assets to recover in value.

RBS withdrew from the government's Asset Protection Scheme last October, where it had sheltered £282 billion of its most toxic assets at a cost of £2.5 billion in premiums since 2009.

The move saw the bank take more than £100 billion of assets back onto its balance sheet.